With the Budget Law for Fiscal Year 2018, Italy introduced a mandatory e-invoicing system for domestic invoices. Such e-invoicing obligation already exists for so-called “Business to Government" supplies and per 1 January 2019, this obligation will be extended to general “business-to-business” (B2B) and “business-to-consumer” (B2C) invoices. The e-invoicing system entails the obligation for companies to issue digital invoices through a platform of the Italian tax authorities, the “Sistema di Interscambio” or “SDI” in short. In this newsflash we will summarize the main aspects of the new rules.
Mandatory e-invoicing
Per 1 January 2019, invoices in Italy should be issued as e-invoices through the governmental platform SDI. The applicable format for these e-invoices will be XML, in the (near) future other formats may be accepted as well by SDI. In addition, an electronic signature will be required for e-invoicing.
These new e-invoicing obligations will apply to all taxpayers established in Italy and also to non-resident taxpayers with an Italian VAT registration only (either a direct Italian identification or through a VAT representative). The new rules will apply to most transactions, B2B as well as B2C, with some exceptions, for example for certain cross-border supplies of goods or services. Furthermore, for some specific transactions it will be possible to opt in for the new e-invoicing rules, for example in case of retail sales to consumers (“B2C”).
Please note that the e-invoices should be issued and sent through SDI in order to be valid. The Italian tax authorities may consider an invoice that is issued in another way than through SDI in the mandatory e-invoicing format, e.g. still in hard copy, as not being issued at all and may therefore be subject to (significant) penalties.
Simplifications
As part of the introduction of SDI per 1 January 2019, also a number of simplifications are proposed. For example, the mandatory e-invoicing through SDI will allow the Italian tax authorities to collect information in relation to these e-invoices. The Italian tax authorities will use this information to prepare a draft of the quarterly and annual Italian VAT return, which will be made available to the taxpayer. In addition, it will under conditions no longer be required to submit the “Spesometro”, a periodical declaration to the Italian tax authorities of all domestic VAT sales and purchases.
Next steps
In order to be timely prepared for these mandatory e-invoicing rules in Italy per 1 January 2019, we recommend to already start assessing the impact of these new rules on your (day-to-day) business. Invoicing and VAT-compliance processes may need to be adjusted in order to mitigate the risk of non-compliance with the new rules and in addition, part of these processes may be (further) optimized with use of tax automation.
Please contact Ruben van Aarle or Maurice Schouten if you would like to discuss the above in more detail.